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Sacramento, CA: State regulators accused Wells
Fargo & Co. of knowingly overcharging about 15,000
Californians on "instant loans" in a suit against the
banking company's consumer finance unit that seeks to invalidate
the loans and impose as much as $38.8 million in fines.
The unsecured personal loans, made by mailing unsolicited offers,
were for $1,000 to $3,000, according to the California Department
of Corporations, which filed the suit in Superior Court in
Sacramento. For example, Wells Fargo charged a borrower
18.2% annual interest on a $2,000 loan check that advertised an
interest rate of 11.16% APR, according to Kam Melzer-Coveyou of
the California Department of Corporations.
If the state succeeds in voiding the loan contracts, the borrowers
-- who took out the loans by signing check-like drafts -- wouldn't
have to repay any of the money, which regulators said totaled
about $24 million.
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